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  Figures and Forecasts by Eric Gaus

Figures and Forecasts

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Timing the Next Recession

9/18/2017

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The next recession surely is on the horizon, some commentators a recession quickly approaching (usually citing the historically strong stock market) while most point to labor market slack and lack of inflation as signs the the recovery continues to progress. Forecasters, however, have signaled a turning point around the end of 2018, at least in terms of the unemployment rate:
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This v-shape has been well defined since the end of 2016, and while it may not perfectly correlate with the beginning of the next recession, it does provide some insight. Because we are rapidly approaching the close of 2017 there are two other variables that might give further indication of an impending recession, payrolls forecasts and recession probability:
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At this point, both of these year-ahead forecasts have been stable for the past few months. This past month the recession probability tick up quite a bit, and given the unemployment graph, one might expect it to continue to rise over the next six months. If the expected recession probability does start to increase and payrolls forecasts decline, that trough in unemployment will materialize around the beginning of 2019.
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